Last week Senators Brown, Hobbs, Braun, Mullet, Frockt and Warnick introduced SB 5866, which would create a tax court. Additionally, Senators Brown, Hobbs, Braun, Mullet, Fain and Warnick introduced SJR 8209, which would amend the constitution to authorize the tax court. Both bills were heard by the Senate Law & Justice Committee yesterday.
In a report last month, we wrote in depth about Washington’s current tax appeals process and alternatives that the state could consider to improve it. Some elements of a tax appeals process that are considered best practice are that there be no pre-payment requirement, that members of the appeals forum be experienced in tax law, that the forum be truly independent, and that the forum establish a record for future appeals.
As we discuss in our report, Washington’s system gets low marks on a national tax administration scorecard. This is because “Washington’s system is time consuming and expensive to access and navigate, decisions do not always have precedential value, and those hearing cases do not always have tax expertise.”
In 2015, the state Senate passed 2SSB 5449, which would have created a tax appeal division in the state Court of Appeals (and which would have improved our grade on the scorecard). SB 5866 would create a stand-alone tax court. Other highlights from SB 5866:
- A main department would hear complex cases.
- Every case would have to be decided within six months.
- A commissioner department would hear other appeals (a more informal option).
- Final decisions of the main department would have to be published as opinions of the court.
- Commissioner department decisions would not be precedential.
- Tax court judges would have to have been members of the bar for at least five years and “have at least five years’ experience as an attorney practicing in Washington state and local tax law.”
- The tax court would hear property, excise and estate tax appeals, and appeals of Superior Court decisions.
- Generally taxpayers would not have to pre-pay the disputed tax.
- A taxpayer would not have to exhaust administrative remedies before appealing to the tax court.
- The Board of Tax Appeals would be transferred to the tax court.